Industry Updates: Discount and Specialty Stores – September 2015

Personnel Updates

Big Lots, Inc. announced three executive promotions along with realignment of responsibilities, all with the singular focus of supporting the Company’s long term strategy. Lisa M. Bachmann was promoted to Executive VP Chief Merchandising and Operating Officer with primary responsibility for the Merchandising, Planning and Allocation, and Global Sourcing teams. Additionally, she will maintain responsibility for the Information Technology strategy and team. Timothy A. Johnson was promoted to Executive VP, Chief Administrative Officer and CFO, with primary responsibility for the Accounting and Finance functions, Asset Protection of stores, offices, and distribution centers, and the Real Estate team. In his new role, he assumes responsibility for the company’s distribution centers and global logistics operations. Michael A. Schlonsky was promoted to Executive VP, Human Resources and Store Operations, with primary responsibility for company associates and associate relations. In conjunction with these promotions, the company announced the departure of Richard Chene, former Executive VP and Chief Merchandising Officer.

BJ’s Wholesale Club Inc. has named Christopher Baldwin President and COO, perhaps putting him in position to succeed Laura Sen as CEO. Baldwin will oversee merchandising, logistics, membership, marketing club operations. He will also join the board of directors at BJ’s, a company wholly owned by affiliates of Leonard Green & Partners, CVC Capital Partners and its management team.

Conn’s Inc. announced that former Sears Automotive President Norman Miller has been named President and CEO. Miller succeeds Theodore M. Wright, who will remain on the Conn’s board as Executive Chairman.

Sears Automotive Group has announced that Norman Miller has left the company after serving as President for a year and a half. Mr. Miller has been named President and CEO of Conn’s Inc.

Target Executive VP Merchandising Jose Barra, is leaving the company. The retailer is searching for a new Chief Merchandising Officer.

Target has promoted current CFO John Mulligan to the newly created role of Executive VP and COO,. Mulligan will assume oversight of stores, supply chain and properties. MR. Mulligan will report to CEO Brian Cornell.

Target has named Cathy Smith as its Executive VP and CFO. Smith will report to CEO Brian Cornell.

Financial Focus

Costco Wholesale Corporation reported that for the 52-week fiscal year ended August 30, 2015, the company reported net sales of $113.7 billion, an increase of three percent from the $110.2 billion reported last year.

Tuesday Morning Corporation announced financial results for the fiscal year ended June 30, 2015. For the twelve months ended June 30, 2015, net sales increased 4.8% to $906.4 million, compared to $864.8 million for the same period last year. The Company’s sales comparison to the prior year is impacted by the net closure of 41 stores in the current year. Comparable store sales increased 7.2% compared to the same period a year ago, and were driven by a 7.0% increase in customer transactions, along with a 0.2% increase in average ticket.

Mergers and Acquisitions

Fiskars Corporation, a leading consumer goods company, has completed the acquisition of the WWRD Group of companies from KPS Capital Partners. With the closing of the acquisition Fiskars Corporation extends its portfolio with iconic luxury home and lifestyle brands, which include Waterford, Wedgwood, Royal Doulton, Royal Albert and Rogaška. The acquisition has been approved by the US antitrust authorities.

Industry Insight

Costco plans to open up to an additional 14 new warehouses (including two relocations) before the end of calendar year.

Real Estate

Five Below opened its largest location to date in its hometown. The extreme-value retailer, which targets tweens and teens with goods priced at $5 or less, opened a two-story, 13,000-sq.-ft. store next to its headquarters on Sept. 10. The store is Five Below’s first two level location. It is located in a building that was formerly home to the Arcadia Theatre. Constructed in 1915, the theater features crown moldings, high ceilings and exposed brick walls, which will be juxtaposed with Five Below’s lighted ceiling logo and colorful signage. Additionally, the space will feature unique fixtures and amped-up candy, tech and sports departments that will come with interactive twists. So far in 2015, the company has opened 56 stores. It expects to end the year with 70 new locations.

IKEA will open the largest Ikea store in the United States in Burbank, Calif., next year. The new store, on 22 acres along Interstate 5 in Burbank, be 456,000 square feet (the biggest Ikea in the world, at 594,000 square feet, is in Stockholm). Plans include parking for 1,700 cars, improved access and parking and a larger warehouse space, plus 50 ‘inspirational room-settings,’ three model-home interiors, a supervised children’s play area and a larger restaurant for serving Swedish specialties.” Ikea has contracted with VCC Construction to build the new Burbank store. Just as the existing location has a solar photovoltaic array atop its roof, the retailer hopes to install a similar solar energy system atop the relocated store.

Green Initiatives/Sustainability

IKEA announced that Shoppers who drive an electric vehicle and shop at Ikea in Canada just got a big gift from the Swedish retailer. Ikea says it plans to install electric charging stations at every store In Canada by August. It is the first national installation of EV charging stations in Canada by a retailer at all of its locations. Charging will be provided to customers at no cost, on a first come first serve basis. Ikea Canada stores are located close to major transportation corridors, and a typical visit to a store gives enough time for an EV driver to top-up their battery, enhancing their travel range and preventing “range anxiety”.

IKEA announced it will become the first major global retailer to offer a 100% LED light bulb assortment. In a bid to make its products more sustainable, the retailer will switch all of its available bulbs to LED bulbs by the end of September.

IKEA is working to reduce its use of energy and to use more renewable energy. The company’s goal is to produce as much renewable energy as the total energy IKEA consumes globally by 2020. As of the end of 2015, IKEA renewable energy investments in the U.S will produce four times more energy than IKEA uses in U.S. operations. Recently, the IKEA Group and IKEA Foundation committed $1.12 billion to accelerate the transition to a low-carbon economy and to support communities most at risk. This follows an IKEA Group commitment to invest $1.9 billion in renewable energy by the end of 2015.

IKEA has pledged globally to become energy independent by 2020. In Canada, the retailer has more than achieved this goal in 2015 and has been named one of the county’s greenest employers for the 7th consecutive year.

IKEA Canada, as part of its commitment to sustainability, has invested in a 46 megawatt wind farm in Alberta, almost 4,000 solar panels on the roofs of three Ontario stores, and houses Manitoba’s largest geothermal installation.

Technology News

Target Corp. is putting a spotlight on how the “Internet of Things“(IoT) will transform consumers’ homes and lives. The company has opened an experimental space that provides an upfront and personal look at how the IoT can connects everyday items like thermostats and door locks. The move follows the opening of Sears’s “Connected Solutions” flagship in San Bruno, California. Target’s new showcase, dubbed “Open House” is part retail space, part lab, and part meeting venue for the connected home tech community. It opened in San Francisco’s Metreon shopping center, below a CityTarget location. The 3,500-sq.-ft. space features a transparent, acrylic “house” complete with acrylic furniture and detailing. The rooms feature vignettes, including a living room and a nursery, that demonstrate how multiple connected devices can work together to create real-life solutions. It sells about 35 devices, including a Nest Thermostat, a Sonos music player, and a Ring smart doorbell. Only about a third of the products are currently sold in Target stores. Target trying personalize the benefits of these products, as well as show them working in harmony. It’s about creating a destination for engagement and discovery. Target also plans to learn from Open House. The retailer and its supplier partners will get real-time feedback from consumers interacting with the products. Target also plans to use the space to host regular meetings – from tech talks and meet-ups to product demos and product launches. The Enterprise Growth Initiatives Team created Target Open House. The company plans to use Open House to test these trends, both for the company, manufacturers and for guests.

Arthur has worked at Chain Store Guide for 20 years. He received a B.A. degree from City College of New York and attained a master’s degree in electronic communications from Brooklyn College. Please contact him if you have any questions or comments.